Apple creaming profits on iPhone

Apple’s iPhone could deliver a profit margin of more than 55 per cent after hardware and manufacturing costs, research firm iSuppli said on Tuesday, sending shares in the company up nearly 5 per cent.

The iSuppli report provided a glimpse into the financial model of the iPhone, which hit U.S. stores on Friday, and gave a new boost to Apple.

Some analysts had predicted the company’s shares would grind to a halt or even drop after gaining more than 30 per cent in the run-up to the iPhone launch.

Based on an examination of the iPhone’s components, iSuppli estimated that its hardware and manufacturing cost was $US265.83 ($NZ330), or almost 45 per cent of a $US600 retail price for its more expensive model with eight gigabytes of storage.

That leaves a profit margin of more than 55 per cent, but does not include costs such as royalties or logistics.

In comparison, iSuppli said, average gross profit margins range from 20 per cent to 30 per cent for advanced phones from cell phone rivals such as Nokia, Motorola and Samsung.

Other analysts have estimated that traditional cell phone makers tend to achieve gross margins of 40 per cent to 45 per cent for their high-end phones.

The report cheered investors who have bet the iPhone, which combines a phone, Web browsing and a media player, will become a major part of Apple’s business alongside its Mac computers and iPod digital media players. ISuppli has estimated the iPod’s gross margins run at 40 per cent to 50 per cent.

Apple and AT&T, the iPhone’s exclusive U.S. service provider for the next two years, have kept details of their business partnership under wraps.

Some industry experts say that AT&T may reap a portion of the retail price for iPhones sold in its stores.

On the flip side, other analysts say Apple could pocket anywhere from $US5 to $US9 of monthly service charges levied on iPhone customers by AT&T. The minimum required two-year wireless service contracts for the iPhone cost $US60 per month.

Apple was not immediately available for comment on the iSuppli estimates.

ISuppli also shed light on the companies providing parts for the iPhone. The phone’s display, a much lauded feature for the device, costs $US27 or about 10.8 per cent of its hardware costs. The display was supplied by Germany’s Balda AG, iSuppli said.

The phone’s core communications chips, from Infineon Technologies AG, represent $US15.25 or 6.1 percent of the cost.

Estimates for iPhone sales in its first two days on the market ranged from 312,000 to 500,000, analysts contacted by Reuters said. AT&T said that iPhone sales for the weekend were the strongest for any device in the company’s history.

Apple shares were up $5.91 or 4.9 per cent to $US127.17 on Nasdaq. Shares of AT&T were down 35 cents at $US41.50 on the New York Stock Exchange.

First drive: Ford Mondeo

DAVE MOORE tries the new-generation Ford mid-sizer and finds a talented car that will mean business second time around in Oz.

The new Ford Mondeo is a big car. Not quite as big as Ford’s large-car stalwart, the Falcon, but bigger than many mid-sized vehicles, which are the latest darlings of car sales.

Fortunately, unless you’re inside its delightfully organically shaped cabin, the new Mondeo doesn’t look the size it is. But it does look gorgeous, and for the first time in its 16-year history, here is a Mondeo with an appearance on a par with its driving talent.

The European-sourced Mondeos have long been accepted as the yardstick in terms of front-drive dynamics, but they haven’t exactly won hearts in the styling department.

But the new model makes a more convincing case. The hatch and sedan – which are difficult to tell apart side-on – have an elliptical sideglass profile that sits on top of a main hull in such a way as to create a subtly cab-forward silhouette. A wagon will also be available, but is not expected to be offered in Australia.

All three Mondeos are similarly detailed with lozenge-shaped main front lights either side of an egg-crate grille. Below, a similarly baffled under-chin intake will be familiar to those who’ve seen the higher performance Falcons.

At the rear, the hatch and sedan Mondeos have softly profiled triangular light clusters, while the wagon has longer wraparound units.

Side-on, the three designs feature a strong side-strake that provides the body with a vestigial shoulder that catches the light like a blade, while prominent wheel-arches and a tiny upkick at the third side glass help create three of the tautest side-profiles in the game.

Just as significant as the styling updates are the changes to the Mondeo under the skin. The third-generation Mondeo also has a significantly stiffer body, allowing the suspension to do its job.

Add the extra width and length than previous mid-sized Fords, and it definitely feels like a much larger car on the road.

The new Mondeo is 4778mm long (4844mm hatch), 1886mm wide, and 1500mm high. That’s 22mm wider and 56mm taller than a Falcon, but Ford’s large car is 152mm longer.

The Mondeo’s weight distribution and centre of gravity is improved by its larger dimensions, so it’s as agile a front-drive car as you’ll find.

Throw in that familiar sense of balance that European-sourced Fords have always enjoyed, and steering as accurate as any in the business, and you find the Mondeo starts to shrink neatly around you as you get familiar with it.

Its road manners are incisive and totally faithful. There’s ample cornering grip and a sense of poise that will attract sporting drivers. Simply, it’s a family car that will satisfy those who still like to enjoy their driving.

Our first brief drive occurred in Sardinia, where we tried the 2.0-litre turbo-diesel four-cylinder in both six-speed manual and automatic forms. There was also the opportunity for a stint in the Volvo-sourced 2.5-litre turbocharged petrol five-cylinder.

Australian specifications are yet to be announced, but sources suggest both engines are on the local menu. There’s also a 2.3-litre petrol four-cylinder, which makes sense for Australia.

The six-speed automatic diesel was able to keep up with the five-cylinder car with relative ease. The automatic gearbox shift swith remarkable speed and smoothness on its own and at the behest of driver override, to the extent that while the ultimately sportier petrol five-cylinder was entertaining, punchy and easy to listen to when revving out, the diesel was always ready to match it for urgency, especially on unfamiliar roads.

In contrast, the turbocharged five-cylinder was mildly disappointing in the Mondeo, unlike its more impressive response in the lighter, smaller Focus XR5. I feel it copes less well with the Mondeo’s bodyweight than the diesel does.

Ford claims the Mondeo with the five-cylinder turbo accelerates from standstill to 100km/h in 7.5 seconds. This drops to 9.5sec for the four-cylinder diesel. The 103kW TCDi is more frugal at 5.9 litres per 100km, though, compared with the 162kW turbo petrol’s 9.3L/100km.

Inside, the Mondeo is massive. No amount of dimensional comparisons with the old model can quite prepare you for the space in this car. It helps that the Mondeo’s wheelbase is 21mm longer (2850mm) than the Falcon’s.

Up front, the driving position is excellent, with the car’s extra width being exemplified by the distance between shoulders and the door, which is considerable, leaving plenty of space for side and curtain airbag deployment.

There are seven standard airbags, with knee-protection also included. The load space, too, is large. It’s also flat and uncluttered.

Downsides include the wood-look interior, which looks downmarket and tacky against the otherwise shapely, sweeping dash.

With machine-finished alloy fillets instead of timber, the dash and console area is excellent. It’s organically shaped and logically laid out, with every control where it should be.

All up the Mondeo is an impressive package, but one that will rely on sharp pricing to be well received in Australia, where it goes up against the impressive might of the Honda Accord Euro, Toyota Camry and soon-to-be-replaced Mazda6.

iPhone sales add luster to Apple stock

Apple’s stock soared to a record high Tuesday amid analyst reports that sales of highly profitable iPhones easily rocketed past 300,000 after its US launch.

Apple shares were up nearly five percent, going for 127.17 US dollars a piece when the New York Stock Exchange closed. The price slipped a fraction to 126.82 in after-hours trading.

Investors were evidently reacting to reports from analysts that from 310,000 to 700,000 iPhones have been snapped up since the devices began selling on Friday and that the profit margin on the devices is estimated at 55 percent.

Apple and US telecom giant AT&T, the exclusive iPhone service provider, did not disclose sales figures “for competition reasons.”

“In its first weekend we sold more iPhones than in the first month of any other wireless phone AT&T ever offered,” AT&T spokesman Mark Siegel told AFP. “That’s how good it’s been. We are simply not releasing figures.”

Nearly all of AT&T’s 1,800 stores were sold out of iPhones by Monday and new stocks were en route, according to Siegel.

The rush of people activating their iPhones online during the weekend flooded AT&T computers, causing delays in a small fraction of cases, according to Siegel.

“We think all those problems are behind us,” Siegel said. “The overwhelming number of customers went home, onto their iTunes website and were off and running in a matter of minutes the way it was intended.”

The touch-screen devices, which combine Internet, telephone and iPod-like music and video play, are sold at Apple and AT&T stores and at Apple’s online store.

An eight-gigabyte iPhone is priced at 599 US dollars and a four-gigabyte version is 499 US dollars.

Among the hordes of people that raced to get iPhones are those that tore them apart to figure out which companies supply parts and how much the devices cost to make.

Research firm iSuppli reported Tuesday that it dismantled an eight-gigabyte iPhone and determined Apple paid approximately 266 US dollars for the parts.

The iSuppli analysis pegs Apple’s iPhone profit margin at 55 percent, even more than the 40 to 50 percent it makes off each iPod MP3 players.